Alnylam Pharmaceuticals, Inc. — FY 2023 Form 10-K
Reporting period: Year ended December 31, 2023. This is an annual report; the supplied filing text does not provide standalone fourth-quarter results.
Business context
Alnylam is a commercial-stage biotechnology company developing RNA interference (RNAi) medicines. It reported four directly commercialized products—ONPATTRO, AMVUTTRA, GIVLAARI and OXLUMO—and Leqvio, which is developed and commercialized by Novartis. Its strategy is to expand across rare, specialty and select prevalent diseases.
Financial performance and liquidity
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Total revenue | $1.828 billion | $1.037 billion | +76% |
| Net product revenue | $1.241 billion | $894.3 million | +39% |
| Collaboration revenue | $546.2 million | $134.9 million | +305% |
| Royalty revenue | $40.6 million | $8.2 million | +397% |
| Operating costs and expenses | $2.110 billion | $1.822 billion | +16% |
| Loss from operations | $(282.2) million | $(785.1) million | Loss narrowed |
| Net loss | $(440.2) million | $(1.131) billion | Loss narrowed |
| Net cash from operating activities | $104.2 million | $(541.3) million | Improved |
Product revenue growth primarily reflected AMVUTTRA’s launch and increased GIVLAARI and OXLUMO sales, partly offset by lower ONPATTRO sales as patients switched to AMVUTTRA. FY 2023 product revenue by product was AMVUTTRA $557.8 million, ONPATTRO $354.5 million, GIVLAARI $219.3 million and OXLUMO $109.8 million.
Cost of goods sold was $268.2 million, or 21.6% of product revenue, implying a product gross margin of approximately 78.4% on that basis. The higher cost ratio versus 15.7% in 2022 reflected increased AMVUTTRA royalties and excess/obsolete inventory charges, including ONPATTRO inventory associated with the cardiomyopathy indication that was not approved in the U.S. Operating loss was about 15.4% of total revenue and net loss about 24.1% (calculated from reported figures).
Cash, cash equivalents and marketable securities totaled $2.44 billion at year-end, versus $2.19 billion in 2022. Operating cash flow turned positive, substantially aided by the $310 million Roche upfront payment and a $100 million Regeneron payment, in addition to higher product receipts. Management cautions that operating results fluctuate and the positive cash flow should be considered in light of these receipts.
At December 31, 2023, current assets were $2.983 billion and current liabilities $967.8 million (current ratio approximately 3.1). Convertible debt was $1.021 billion, principally 1.00% notes due 2027. The liability for sold future Leqvio royalties was $1.377 billion; the company reported $106.6 million of non-cash interest expense on that liability for the year. Total liabilities were $4.051 billion and stockholders’ deficit was $220.6 million. The filing identifies no principal payments on the notes due within the next 12 months.
Material changes and notable items
- AMVUTTRA revenue rose to $557.8 million from $93.8 million; ONPATTRO revenue fell 36% to $354.5 million, mainly due to patient switching.
- Collaboration revenue included $337.8 million recognized under the Roche zilebesiran agreement, including its $310 million upfront payment, and higher Novartis milestone revenue. Leqvio royalty revenue also increased.
- Research and development expense rose 14% to $1.004 billion, while selling, general and administrative expense rose 3% to $795.6 million. Total operating expenses increased, but the operating and net losses narrowed substantially as revenue grew and 2022 included a $76.6 million debt-extinguishment loss.
- Cash from operations improved by $645.4 million year over year. Investing cash flow was $(336.4) million and financing cash flow was $172.1 million.
Outlook, commentary and risks
Alnylam targets sustainable non-GAAP profitability within its P5x25 strategy by the end of 2025, alongside at least 40% revenue CAGR through year-end 2025, six or more marketed products and more than 0.5 million patients on RNAi therapies. These are strategic goals, not guaranteed outcomes. The filing does not provide a clear numerical 2024 financial guidance range. Management expects collaboration revenue to decrease in 2024, primarily due to lower Roche agreement revenue, while Leqvio royalties are expected to increase. It expects combined R&D and SG&A expense to increase in 2024 and capital expenditures to rise.
- Regulatory and clinical: The FDA issued a complete response letter for patisiran’s cardiomyopathy application, finding clinical meaningfulness had not been established; the letter cited no safety, study-conduct, quality or manufacturing issue. HELIOS-B results for vutrisiran were expected in late June or early July 2024. A positive result and approval are uncertain.
- Pipeline execution: Zilebesiran’s KARDIA-1 Phase 2 results were positive; KARDIA-2 results were expected in early 2024. Fitusiran, developed by Sanofi, had a U.S. NDA submission expected in 2024. Pipeline outcomes, timing and approvals remain uncertain.
- Collaboration dependence: Revenue and development depend in part on Roche, Novartis, Regeneron, Sanofi and other partners. The Roche agreement offers up to $2.52 billion in contingent development, regulatory and sales milestones, but payments depend on achieving specified events.
- Manufacturing and market access: Alnylam relies on a limited number of third-party manufacturers for important commercial and clinical supplies. Pricing, reimbursement, competition and healthcare policy changes could affect sales and royalties.
- Debt and royalty obligations: The Leqvio royalty-sale liability depends on forecasts of product sales. If Blackstone receives less than $1 billion in specified royalty payments by December 31, 2029, its share of the royalty interest rises from 50% to 55% beginning in 2030.
- Legal and other contingencies: Patent-infringement litigation involving Pfizer/BioNTech and Moderna over COVID-19 vaccine-related lipid patents is ongoing, with outcomes and any recovery uncertain. The filing also discusses clinical, regulatory, intellectual-property, cybersecurity, foreign-exchange and geopolitical risks.
The financial statements received an unqualified audit opinion, and management and the auditor reported effective internal control over financial reporting as of December 31, 2023.
Important facts for investors to verify
- AMVUTTRA’s continued growth and the pace of ONPATTRO-to-AMVUTTRA switching, including the effect on product margins and royalties.
- HELIOS-B results, regulatory follow-up and commercial prospects for vutrisiran in ATTR cardiomyopathy; separately, any path forward for patisiran after the FDA letter.
- How much 2024 cash generation depends on collaboration receipts, and whether product revenue growth can support rising R&D, SG&A and capital spending.
- Leqvio sales and royalties, the associated Blackstone liability assumptions, and the potential 2030 change in royalty share.
- Progress and costs under the Roche zilebesiran collaboration, including milestone conditions and the expected decline in recognized collaboration revenue in 2024.
- Manufacturing continuity, reimbursement and pricing developments, and material updates in patent litigation.